Pay-TV, broadband boost Brazil telco market

March 1, 2016

The higher adoption of pay-TV and broadband services, provision of multiple-play bundles and value-added services (VAS), and investments to expand fibre-optics networks and mobile broadband networks have given a huge boost to the Brazilian telecommunications market. The wider range of innovative technologies, reduced network deployment costs and prices of entry products will especially aid the deeper penetration of telecommunications products in the lower income segments and underserved cities.

There is a fresh market for novel business models such as OTT video services, business and home applications of broadband services, and machine to machine (M2M) and payment applications in mobile networks. In effect, operators are offering a combination of low-priced services for the untapped segments, and premium solutions for increasing the average revenue per user.

“The deployment of 3G, Long-Term Evolution and fibre-optics networks make available higher bandwidth and throughput, and open up markets for additional applications and services in the consumer and business segments,” said Frost & Sullivan Digital Transformation Industry Analyst Carina Gonçalves. “Besides, with the rise of small cable TV associations and Internet service providers, untapped markets such as pay-TV and broadband could also witness heated competition.”

On the flip side, the intense competition could diminish margins, as can the revised tariff regulations on the prices of traditional telecommunications services such as voice and basic connectivity. Furthermore, the high taxes on telecom services and spectrum, and costs limitations on broadband services can constrict the profits of operators.

The Government and the national telecommunications regulator, Anatel, play important roles in implementing and revising the National Broadband Plan and improving regulation policies as well as aggregating operators’ interactions and contributions. In order to stimulate broadband and connectivity services growth, the regulator must encourage infrastructure sharing, since there is not enough space for new transmission structures, especially in the metropolitan areas. In the current scenario, telecommunications operators are investing heavily in the deployment of their own networks, which limits their ability to slash prices as their business plans restrict profitability.

“All fixed operators are focusing on enhancing data capacity and expanding geographical coverage of their networks to enrich quality of service and expedite return on investment in a progressively connected environment,” noted Gonçalves. “In this context, over-the-top services and Internet neutrality are becoming increasingly relevant and will be vital to the business plans of telecommunication service providers in Brazil.”